CHICAGO Nov 13 U.S. production of corn-based ethanol could reach 14 billion gallons in 2014 because of positive margins for processors and demand from buyers, Archer Daniels Midland Co's chief executive said on Wednesday.
Production could be "in the 14 billion range" even if the U.S. Environmental Protection Agency (EPA) lowers its target for use of renewable fuels, ADM CEO Patricia Woertz said in a webcast of a Morgan Stanley conference. Illinois-based ADM is the top U.S. ethanol producer.
The EPA is expected to propose new targets for its Renewable Fuel Standard (RFS) as early as this week.
"Regardless of where the RFS comes through, we see it as a period where you can have positive margins," Woertz said of the coming year.
U.S. farmers are harvesting a record-large corn crop this year and replenishing inventories depleted by last year's historic drought. The influx of supply has pushed corn futures to three-year lows and ethanol margins to their highest level since late 2009, the last year of a record corn harvest.
The EPA has considered a proposal that would set next year's target for use of renewable fuels at 15.21 billion gallons, according to a leaked draft of the proposal. That would be less than the 18.15-billion gallon 2014 target established in the law.
At 15.21 billion gallons, the proposal would leave room only for some 13 billion gallons of corn-based ethanol to be blended into the nation's gasoline supply, down from 13.8 billion this year and 14.4 billion required by law for 2014.
"Keep in mind that the industry produced 14 billion gallons before, even though the mandate was only 12.8, back in 2011," Woertz said. "It could be another example of the industry producing to meet market demand."
The EPA has said gasoline blended with as much as 15 percent ethanol, or E-15, is safe for vehicles made in 2001 or later. But oil refiners have argued the blend could damage car engines, and few gas stations sell it outside of the Corn Belt.
Cheaper corn and ethanol prices "will allow more retail outlets to see the economic opportunity for them to do it on, maybe not a one-by-one basis, but maybe in larger numbers," Woertz said about adding E15 pumps.